Missed Deferral Opportunity- Safe Harbor Plan

[Coleboy1]

Client has a plan with a standard safe harbor match. Participant went on the system and changed her deferral percentage. She also increased her catch-up amount by $10. The recordkeeping system does not recognize both a deferral percentage and a catch-up so only the catch-up portion was picked up by payroll. Hence, since July 2021, only the catch-up amount has been taken out of her check. She just noticed this a year and a half later.

Since this is a safe harbor plan, what would the missed deferral calc be based on? In other words, would it be based on the 8% that she wanted or just on the maximum match of 4%?

[WCC]

It's based on what she elected. See Rev Proc. 2021-30 Appendix A .05(5) and (9).

[Coleboy1]

That was always my understanding then I read somewhere that if it was a SH plan, the calcs were done differently.

[Bri]

I think that's in reference to a missed participant, not a missed change by an existing participant.

[RAH401(k)]

Out of curiosity, how was she able to enter an election specific to catch up contributions if the recordkeeping system doesn't track catch up and deferrals separately?